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Refusals to Cross Stranger Picket Lines and the Wealth Maximization Principle: an Economic Analysis of the Views of the NLRB and Judge Posner

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Refusals to Cross Stranger Picket Lines and the Wealth Maximization Principle: an Economic Analysis of the Views of the NLRB and Judge Posner University of Miami Law Review Volume 41 Number 3 Article 5 1-1-1987 Refusals to Cross Stranger Picket Lines and the Wealth Maximization Principle: An Economic Analysis of the Views of the NLRB and Judge Posner Brenda Greenberg Bryn Follow this and additional works at: https://repository.law.miami.edu/umlr Recommended Citation Brenda Greenberg Bryn, Refusals to Cross Stranger Picket Lines and the Wealth Maximization Principle: An Economic Analysis of the Views of the NLRB and Judge Posner, 41 U. Miami L. Rev. 533 (1987) Available at: https://repository.law.miami.edu/umlr/vol41/iss3/5 This Case Comment is brought to you for free and open access by the Journals at University of Miami School of Law Institutional Repository. It has been accepted for inclusion in University of Miami Law Review by an authorized editor of University of Miami School of Law Institutional Repository. For more information, please contact [email protected]. CASE COMMENT Refusals to Cross Stranger Picket Lines and the Wealth Maximization Principle: An Economic Analysis of the Views of the NLRB and Judge Posner 1. INTRODUCTION ....................................................... 534 II. THEORETICAL. OVERVIEW .................................................. 540 A. Normative Economics: Wealth Maximization v. Utilitarianism ........... 540 B. Positive Economics. Labor Law v. Common Law ....................... 543 C. The "Original Deal Struck": Interpretation of the Wagner Act ... ........ 545 III. "PROTECTING" REFUSALS TO CROSS STRANGER PICKET LINES: THE VIEWS OF THE BOARD AND JUDGE POSNER ..................................... 547 A . The Board's View ................................................. 547 B. An Analysis of Judge Posner's Approach to Protection ................... 551 1. THE ORIGINAL "DEAL" STRUCK .................................. 554 2. THE ECONOMIC INTENT REQUIREMENT ............................. 555 3. WEALTH MAXIMIZATION V. UTILITARIANISM REVISITED ............ 558 4. THE BOTTOM LINE OF PROTECTION ............................... 560 IV. THE EMPLOYER'S BUSINESS NECESSITY: THE VIEWS OF THE BOARD AND JUDGE POSNER ........................................................... 560 A. The Board's Replacement/DischargeControversy ....................... 560 B. Browning-Ferris: A Distinction Between Replacement and Discharge? ..... 564 C. Transaction Costs in the Browning-Ferris Context? ..................... 567 1. NO BILATERAL MONOPOLY ........................................ 568 2. NO MULTIPLE PARTY OR FREERIDER PROBLEM ..................... 569 3. NO INFORMATIONAL BARRIERS TO EXCHANGE ..................... 570 4. NO PROBLEM IDENTIFYING PUTATIVE PARTIES TO THE TRANSACTION. 571 5. NO JUSTIFICATION FOR JUDICIAL INTERVENTION OR ENTITLEMENT SHIFTING IN Browning-Ferris..................................... 571 D. Wealth Maximization: The Board's Factor-by-FactorBalancing Test and Its Result in Browning-Ferris ....................................... 573 1. UNAVAILABILITY OF OTHER EMPLOYEES .......................... 577 2. REGULARITY OF REFUSED WORK ................................. 578 3. UNAVAILABILITY OF OTHER WORK ............................... 579 4. URGENCY OF REFUSED WORK .................................... 581 5. REDUCTION OF TRANSACTION COSTS .............................. 582 6. PROTECTION AS WEALTH MAXIMIZATION IN Browning-Ferris......... 583 E. Judge Posner's Cost-Benefit Balancing-A Critique ..................... 584 1. FUTURE RATHER THAN PRESENT COSTS TO THE EMPLOYER ......... 585 2. OVERESTIMATION OF PRESENT COSTS ............................. 586 3. NO CONSIDERATION OF THE BENEFIT TO THE EMPLOYEE ............ 588 V. CONCLUSION .... ......................................................... 588 UNIVERSITY OF MIAMI LAW REVIEW [Vol. 41:533 I. INTRODUCTION This Comment analyzes the protection accorded an individual's refusal to cross a "stranger" picket line, that is-a picket line at the site of an employer's customer.' Section 7 of the National Labor Relations Act assures employees "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection."2 An individual's refusal to cross a stranger picket line would seem literally to "assist a labor organization" and to be "for the purpose of mutual aid and protection." Recognizing this, the National Labor Relations Board ("Board") has for over thirty years consistently extended section 7 protection 3 to stranger picket line observance.' Although the Board does allow employers to "per- manently replace"' employees who refuse to cross a stranger picket line when the employers make a sufficient showing of factors indicat- ing an overriding business necessity, 6 it does not currently permit actual discharge as a lawful employer response to this form of pro- tected activity.7 Both the Board's longstanding rule on protection and its more recent replacement/discharge distinction have met with mixed suc- I. "The term 'stranger' may [actually] be taken to refer to a picketed employer who is not the honoring employee's employer; to pickets who are not the honoring employee's fellow employees; to a dispute which does not, at least directly, affect the honoring employee; or to the geographical premises upon which picketing occurs where such premises are not owned or controlled by the honoring employee's employer." Cox, On Honoring Picket Lines: A Revisionist View, 17 VAL. U.L. REV. 119, 122-23 (1983) (footnote omitted). For the purposes of this Comment, however, the term "stranger picket line" shall refer to a picket line on the premises of another employer. 2. National Labor Relations Act § 7, 29 U.S.C. § 157 (1982) (emphasis added). 3. Once an activity is considered a section 7 "protected activity," it is shielded against employer retaliation by section 8(a)(1) of the Act, which provides that an employer is guilty of an unfair labor practice when he "interfere[s] with, restrain[s], or coerce[s] employees in the exercise of the rights guaranteed in section 7." 29 U.S.C. § 158(a)(1) (1982). 4. See infra notes 78-100 and accompanying text. 5. Ever since its decision in Redwing Carriers, the Board has analogized the rights of an employer faced with an employee's refusal to cross a stranger picket line to that of an employer faced with an economic strike. 137 N.L.R.B. 1545 (1962), modifying 130 N.L.R.B. 1208 (1961). According to the Supreme Court in NLRB v. Mackay Radio & Telegraph Co., it is not an unfair labor practice for an employer to "permanently replace" economic strikers. 304 U.S. 333, 345 (1938). Permanently replaced economic strikers remain "employees" under section 2(3) of the Act, and accordingly enjoy full protection against unfair labor practices. See Mackay, 304 U.S. at 345. 6. See infra note 202 and accompanying text. 7. See Torrington Construction Co., 235 N.L.R.B. 1540, 1541 (1978). See generally infra notes 156-59 and accompanying text. 19871 STRANGER PICKET LINE OBSER VANCE cess in the courts.8 At least with regard to the threshold determina- tion-whether in fact a "protected right" exists-a number of the reviewing circuit courts have answered in the negative, or at least expressed skepticism while avoiding the issue.9 The Supreme Court of the United States has never directly addressed the issue of protection.o In 1983, Judge Richard Posner, writing for the Seventh Circuit Court of Appeals in NLRB v. Browning-FerrisIndustries,I' squarely upheld the Board's rule providing that a refusal to cross a stranger picket line was protected activity within section 7 of the Act.I2 Those who viewed Judge Posner as "anti-labor" or at least "illiberal" were probably somewhat surprised by Browning-Ferris, while labor law "liberals" were possibly encouraged. Yet appearances can be deceiv- ing, and Judge Posner's apparent deference to the Board's longstand- ing rule was just that. What commentators did not realize when Browning-Ferriswas decided or since," is that the Board and Judge Posner differed considerably on the meaning of a "protected" right. Judge Posner adopted the rhetoric and form of the Board's ana- lytic approach, but not its substance. Using the Board's own termi- 8. Although the Supreme Court has recognized the Board's primacy in precisely delineating the boundaries of section 7 protected activity, see, e.g., NLRB v. City Disposal Sys., 465 U.S. 822, 830-31 (1984); Eastex, Inc. v. NLRB, 437 U.S. 556, 568 (1978) several of the circuit courts of appeals have demonstrated a certain reluctance to adopt the Board's rule in the stranger picket line area. See infra note 107 and accompanying text. Generally, the courts' review of Board decisions should be limited to determining whether the Board's practice has a "reasonable basis in law." NLRB v. Action Automotive, Inc., 105 S. Ct. 984, 988 (1985), 9. See infra note 107. 10. In NLRB v. Rockaway News Supply Co., the Supreme Court sidestepped the issue of protection, affirming on different grounds the Second Circuit's refusal to enforce the Board's order. 345 U.S. 71, 79-80 (1953). The Court based its denial of reinstatement to the discharged employee on the fact that in refusing to cross the picket line, the employee had violated the collective bargaining agreement's no-strike clause. Id. at 81. The Court clearly postponed its decision making on the issue of whether a protected right exists: "The parties here see the case as requiring
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